The mention of special levies is enough to worry many strata owners, but rest assured these levies are only put in place when the vast majority of owners approve the decision. So what is a special levy, when might special levies be required – and how exactly do special levies for stratas in NSW get passed?
First, what is a special levy?
If you’re living in a NSW strata property, you might already be aware of the administrative fund and the capital works fund that you contribute to through your regular strata levies.
The first, the administrative fund, covers day-to-day costs such as insurance, contractors, minor repairs and electricity expenses for common areas.
The second, the capital works fund, is for bigger planned works – things like repainting the building, or replacing the roof of the strata building.
In the case when major unexpected, unplanned or emergency expenses are necessary, here’s where a special levy might come in.
When might you need a special levy?
A special levy might be required if there isn’t enough funds in the capital works fund to cover major costs. Let’s say you have a long-term plan in place to repaint the building, and have voted at an owners corporation to have this carried out in the next year. Your owners corporation might have allocated the appropriate funds to this project, and you would have voted on the planned amount at your last Annual General Meeting (AGM).
Suddenly, the owners corporation is notified that they need to make some urgent upgrades to meet new fire safety regulations. If there isn’t enough in the capital works fund to cover this expense, your owners corporation might take a vote at a general meeting of the owners corporation to bring in a special levy.
The other reason that a special levy might be put in place is if your owners corporation wants to finance an upgrade in the strata community without permanently raising your strata levies. Examples could be installing a new swimming pool, or putting up a new fence.
How do special levies get passed or approved?
Rest assured that special levy rules can’t just be put in place on a whim – they need to be voted in by a special resolution at a general meeting of the owners corporation within 90 days of the notice being given, as outlined by Fair Trading NSW. This means that 75% of the owners corporation (1 vote per lot) will need to approve of the special levy for it to be put in place. Special levies are calculated according to the lot entitlement of each lot owner, so you should know how much this would cost you before you cast your vote. You can also take disputes about special levies to the NSW Civil and Administrative Tribunal.